Imugene has in-licenced a pipeline of B-cell vaccines that complements and advances its in-house programme. The deal has brought forward significant value-creation opportunities while maintaining Imugene’s focus on B-cell vaccine technologies. It accelerates the key PD-1 and PD-1/HER2 combo programmes by two years compared to its original pipeline. The company is well funded to accelerate key clinical studies for the newly combined pipeline. Our valuation is A$147m or 4.1 cents per share.
KEY-Vaxx, the in-licensed PD-1 B-cell vaccine, aims to induce the body to produce polyclonal antibodies that block PD-1 signalling, and thus produce an anticancer effect similar to Keytruda, Opdivo and the other immune checkpoint inhibitor (ICI) monoclonal antibodies that are transforming treatment of a range of cancers. KEYVaxx has shown great potential in preclinical studies. It outperformed an industrystandard mouse anti-PD-1 antibody in a mouse model of HER2+ colorectal cancer.
There is still a long way to go for KEY-Vaxx, with the first clinical trials not expected until 2019. The key role that PD-1 signalling plays in regulating immune responses will ensure that safety is closely examined in pre-clinical and clinical studies, as there is a theoretical risk that KEY-Vaxx could trigger unregulated autoimmune responses in patients. Encouragingly, there has been no evidence of autoimmune disorders in preclinical studies to date. Despite these risks, the broad potential market for KEY-Vaxx will ensure intense interest in the planned Phase I study from potential pharma partners. A successful clinical study of KEY-Vaxx with evidence of efficacy would be transformative for Imugene, in our view.
Imugene now has two HER2 B-cell vaccines in clinical trials, one in-licensed from Ohio State University (OSU) called B-Vaxx, plus its in-house HER-Vaxx programme. Both vaccines have completed Phase I studies showing that they stimulated production of polyclonal antibodies against HER2, with encouraging indications of efficacy, thus providing proof of concept (PoC) for the B-cell vaccine technology as well as suggesting therapeutic potential in HER2+ cancers.
We value Imugene at A$147m or 4.1 cents per share, including milestones and royalties for HER-Vaxx plus an indicative valuation of KEY-Vaxx. With pro forma cash of A$27m following a recent fund raise, it is funded beyond our FY20 forecast horizon.